Community Appeal

C. R. (Rusty) Cloutier has been president and CEO of MidSouth Bank, Lafayette, La., since he started the institution de novo over 18 years ago.

C. R. (Rusty) Cloutier has been president and CEO of MidSouth Bank, Lafayette, La., since he started the institution de novo over 18 years ago. During a stint as state president of the Community Bankers of Louisiana, he attended some events run by the Washington, D.C.-based Independent Community Bankers of America (ICBA), was impressed by what was being said and advocated, and decided to take a more active role in the organization. Over the years he held executive posts within various ICBA committees such as Regulation Review, Policy Development and Payments and Technology.

His involvement with the ICBA came full circle in March when he was elected chairman of the organization. As chairman, Cloutier will oversee the committees and other volunteer aspects of the ICBA, as well as represent the organization on Capitol Hill and at various banking shows and events. Cloutier took some time to speak with editor-in-chief Paul Doocey about his goals as chairman and how technology can help community bankers overcome pressing regulatory and economic challenges.

CLOUTIER: We are working hard in many areas. For example, deposit insurance reform has been a goal of our association for three or four years. Our previous chairman, Pierce Stone, did a very good job of representing us on that issue. We will continue to work on that. Another issue that we will be very engaged in is taxes. That is a very clear issue up in Washington this year on the political side. We are also watching check payment systems. We are engaged with the Fed on talking about those issues and are working very closely with them. We are also very engaged on the issues having to do with the Federal Home Loan Bank, Fannie Mae, Freddie Mac and the GSEs.

BS&T: What is the ICBA's stance when it comes to check payment systems? Are you looking for technology to help community banks in this area?

CLOUTIER: We think that there is no question that technology is greatly changing the way payments will be made. Anybody who would argue that we are going to clear checks the same way five years from now as we do today isn't being realistic. We see change coming. We have a great committee overseeing the issue. As a matter of fact, the head of our Payment and Technology committee last year was a gentleman by the name of David Hayes from Tennessee, who is now the vice chairman of the ICBA, which goes to show you the emphasis we are placing on this.

We work very closely with the BITS (Bank Industry Technology Secretariat) trade group. We have engaged with the Federal Reserve Payment Systems task force. We all know check electronification is a moving target.

BS&T: So what's your primary fear? That community banks will be taken out of the payment process? Will there be a big loss in fee generation?

CLOUTIER: I don't think we will be taken out of the payment process and I don't think it will be a total lost fee for us. We have to continue to be engaged in the issues to make sure that there is a level playing field. That is all we are asking for.

We are in the game. We can already compete very well. We have a very strong credit card program in our services network. ICBA credit card is the 13th to 14th largest issuer in America. We have an excellent debit card product. We have a great Internet product.

So we are just like everybody else-trying to figure out how to make money with check electronification, how to survive with it. The merchants are trying to figure it out too.

But it's not a case of where all the cards in the deck have been dealt yet. It's like playing seven card stud. Right now, everyone's only got three cards showing and you're looking around the table trying to figure out your strategy. It's hard to tell how that hand is going to turn out.

BS&T: What impact is the Real Estate Settlement Procedures Act (RESPA) having on community banks? Is there a way technology can help.

CLOUTIER: Technology can help, absolutely yes. We all know what the problem is. Last year, I served as chairman of Fannie Mae's national advisory committee, and we all agreed that the mortgage process is way too complicated, and nobody really understands all the forms, even the experts.

I think there is a place for technology here. I think people want an opportunity to get mortgage processing and approval done quickly. I think there are ways technology can help get through some of this stuff. For example, Electronic Signature is passed in a lot of states. I think you are going to see more of the process moving in that direction.

BS&T: It seems that a lot of regional banks are investing in the technologies needed to make electronic signatures in the mortgage process feasible. Can community banks make the same commitments to technology? Can small banks effectively compete with large banks when it comes to technology offerings?

CLOUTIER: Actually, I know a number of community bankers who claim technology at their branches took a step backward when they were acquired by a larger bank. I'll even give you an example. I know of some community banks that already had check imaging systems in place, but had to stop using them because the larger institutions that bought them out were not ready for the technology.

There are a lot of small banks that not only have remained technologically competitive with regionals, but have actually been able to beat them with better technology offerings.

BS&T: How is the ICBA helping its member banks with USA PATRIOT Act compliance?

CLOUTIER: We have a great regulatory department headed by Karen Thomas, who does an excellent job. We keep our members involved. We continued to get the message out to them as much as possible, and continue to keep them engaged. We also have a very strong committee structure when it comes to regulatory issues. In the next four years I plan on attending 29 state conventions to get the message out there and answer questions.

We also continue to educate on regulatory issues, and we use a lot of technology in that area. We do a lot of video conferencing, conference calls, and those types of things.

BS&T: So you feel the community banking space is up to par when it comes to the USA PATRIOT Act.

CLOUTIER: Yes, I think we are. We are not having any problems dealing with that.

BS&T: How about the Gramm-Leach-Bliley Act (GLB) and privacy? What has the ICBA response been to that?

CLOUTIER: Privacy is one of those things that you have to be very careful with. People want things done faster. Privacy concerns can slow down the whole process.

But it's not like most community banks had a problem with privacy to begin with. Small banks do not have a lot of affiliates. It was not us selling information to the affiliates that caused the privacy provision to be put in GLB. It's not us who want to buy companies outside the spectrum of the Federal Reserve Rules that created GLB in the first place.

I have a friend who does not necessarily like the large banks and often says, 'They get the gain, and we get the pain.' I think that's a pretty good quote.